Forcibly Reducing Mortgage Rates Lower?
According to WaPo, Paulson is looking into this. Seems okay on the surface, but really would only seem to help people that can re-fi, but Treasury talks about it in terms of trying to spur new buying. But, Big Picture hits the nail on the head on a core issue we've had for some time in housing (something that people that have owned homes for 20+ years cannot seem to understand):There are two problems with Housing:
- Ultra low rates and an abdication of lending standards put 3 - 4 million people in homes they could not afford. The real costs of home ownership have been forcing many of these people to move back into more affordable quarters (i.e., rentals).
- By just about every measure, home prices remain significantly elevated over historic metrics.And given the chain of sales that accompanies any existing home sale — the starter home/move up home/bigger house/even nice home/downsize retiree — anything that keeps home prices out of reach of the starter and move up buyers damages the entire chain fo purchasers.
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Emphasis mine. New homeowners have been priced out of the first time home market under older lending [20% down]/ saving / spending [no more than 25-33% of income on mortgage] habits, and have had to adapt. Moving to the ex-urbs, lots of PMIs, >50% of income spent on mortgage are all habits that most of my friends and contemporaries have had to choose to buy into their first home. This mortgage / credit crisis disproportionately hits the 1st time homeowners that have bought in the past 5 or so years. Not that buying your 1st home in say 1999 was a piece of cake either.
Oh, and bonddad says things suck right now. Indeed.
Labels: Bonddad, economy, housing, The Big Picture, WaPo
posted by jimboses @ 12:50 PM
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